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European carmakers led by Volkswagen are seeking to buy carbon credits from their Chinese electric vehicle rivals as the auto industry seeks to avoid potential fines for failing to meet 2025 pollution regulations set by Brussels. Companies could be forced to pay hundreds of millions of euros.
Under EU rules forcing carmakers to cut emissions, manufacturers slow to transition to electric vehicles must pay billions of euros in fines, cut prices or buy credits from less polluting competitors. They are faced with the choice of increasing EV sales by doing so.
Europe is the fastest-warming continent on Earth, estimated to be twice the global average since the 1980s, largely due to its proximity to the melting North Pole, exposed dark This is because the ground amplifies the effect.
The European Commission plans to fine car manufacturers €95 per car for exceeding the limit of 93.6 grams of CO₂ per kilometer, based on average emissions across a company’s car sales in 2025 is.
Many car manufacturers in the EU are considering using a “pooling” option that would average the greenhouse gas emissions of their vehicles with other companies selling within the region.
Analysts say some European groups are buying hundreds of millions of euros worth of carbon credits from Chinese rivals such as BYD, which has the largest share of credits thanks to strong EV sales in the EU. We estimate that there is a possibility that we will have no choice but to do so.
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Tesla plans to pool credits with companies including Stellantis, Ford and Toyota, according to recent EU filings. The US EV maker has already made more than $2 billion in the first nine months of last year by selling credits to emission pool systems around the world. In another group, Mercedes-Benz is partnering with Polestar and Volvo, both owned by China’s Geely Automobile.
Geely founder Li Shufu owns about 10% of Mercedes, and Beijing-owned Beijing Automotive Motors owns another 10%.
Mercedes said it continues to “invest billions of dollars in electric vehicles.” “However, the pace of transformation in our industry will be determined by market conditions and customers,” the company added.
Analysts say VW and Renault are likely to struggle to meet targets through their own sales, but there are few alternatives to pooling beyond Chinese manufacturers MG-SAIC and BYD. Renault may also collaborate with strategic partners Nissan and Mitsubishi.
Pooling is controversial. Some say the deal will empower Chinese rivals and make European industry less competitive, as Brussels imposes high tariffs on Chinese EVs to protect continental European carmakers. Executives are warning.
Jens Gieseke, a center-right member of the European Parliament, said the EU had made a “mistake” in allowing carpooling with American and Chinese carmakers because it could benefit European carmakers’ rivals. said.
Industry insiders are reluctant to release figures on how much they plan to pay because automakers conduct credit transactions behind closed doors, grouping them based on equity or brand alliances.
According to UBS analyst Patrick Hummel, the German state of Lower Saxony holds a 20% stake in VW, while Renault has a 15% government stake, and the group’s stake with the Chinese automaker is It is a politically sensitive topic.
He said that if VW chooses to make a joint investment, BYD will probably not be able to make up the difference because the German group alone does not sell enough EVs in Europe. He added that it would be necessary to invest.
According to UBS, the German group would need to almost double its EV sales in just one year to meet EU targets itself. Renault has no plans to release a new mass-market EV model in 2025. Renault hopes to expand EV sales by launching a 25,000 euro model.
VW said it would seek to avoid penalties through “its own efforts”, citing a series of all-electric vehicle models launched last year.
“Only in the second stage will other measures, such as pools, come into play and costs and benefits will naturally be weighed,” the company said. “Every euro invested because of the possibility of fines will be an insufficiently invested euro.”
Renault said it was too early to decide on a pooling, but added that a deal with a Chinese manufacturer risks further weakening Europe’s car industry.
Brussels has come under pressure from the industry to make emissions rules more flexible after electric vehicle sales in Germany and France fell last year after governments removed subsidies for purchasing EVs.
The bloc’s climate change commissioner, Wopke Hoekstra, met with representatives from the car industry on Wednesday, with a “strategic dialogue” between officials and the industry set to begin this month.
Additional reporting by Ian Johnston and Patricia Nilsson
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